Chevron U.S.A. Inc. v. Natural Resources Defense Council
467 U.S. 837 (1984)

  • Under the Clean Air Act, nonattainment States were required to permit “new or modified major stationary sources.”
    • Prior to 1981, EPA defined the word ‘source’ as any device in a plan that produced pollution.
    • In 1981, EPA changed this definition to allow an existing plant to modify or install equipment that did not meet standards, as long as the total pollution of the entire plant did not increase.
      • aka the ‘bubble concept.’
  • The National Resources Defense Council (NRDC) sued EPA.
    • NRDC argued that the EPA Administrator did not have the authority to change the standard.
    • As an affected party, Chevron impleaded into the case on EPA’s side.
  • The Appellate Court found for NRDC and set aside the ruling. EPA appealed.
    • The Appellate Court found that both the plain language of the Clean Air Act and its legislative history were ambiguous.
    • The Court found that the purpose of the Clean Air Act was to improve air quality. Therefore the Administrator’s decision to change the definition of ‘source’ contradicted the purpose of the Act, and was therefore contrary to law.
  • The US Supreme Court reversed.
    • The US Supreme Court found that the courts must defer to the opinion of an Executive Agency (like EPA) in certain cases.
    • In order to determine how much deference the courts are to give to an Agency decision, the court must review:
      • Whether the Statute is ambiguous or there is a gap that Congress intended the Agency to fill.
        • Specifically, “has Congress directly spoken, and is the intent clear?”
          • If so, then the Courts must defer to Congressional intent.
      • If Congress’ intent is not clear, is the Agency’s interpretation of a Statute is reasonable or permissible?
        • If an Agency’s interpretation is reasonable, then the Court will defer to the agency’s reading of the Statute.
        • Reasonable” doesn’t mean the way that the court would decide the issue. Even if the court disagrees with the decision, as long as the Agency can point to a reasonable reason why they made the decision, even if it isn’t completely persuasive, the court has to affirm the Agency’s judgment.
      • This process is now known as the “Chevron two-step“.
    • In this case, the Court looked to the Clean Air Act and found that it is ambiguous as to how to define ‘source’. Also, the Agency’s interpretation wasn’t the only possible interpretation, but it was certain a reasonable interpretation. Therefore the Court would defer to the Agency’s decision.
      • The Court felt that if Congress didn’t want the Agency to make their interpretation, they would have been more clear when writing the Statute.
    • The Court found that, “the power of an Administrative Agency to administer a congressionally created…program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress.”
  • Basically, this case said that the courts need to defer to Administrative Agencies when interpreting regulations.
    • The reasoning is that the Agency understands the technical specifics and possible implications much better than the courts ever could, so their interpretation is going to be more informed.
    • This was a shift from the Court’s position in Skidmore v. Swift (323 U.S. 134 (1944)), which had said that an Agency’s position is a good reference point, but should not be considered controlling.
    • Another reason to defer to the Agency is that in many cases, Congress simply didn’t think about the specific issue when the bill was written. Having the court make a decision on what Congress meant, when they hadn’t ever focused on the issue is a legal fiction.
      • What right does a court have to override an Agency based on what Congress meant, when it is pretty likely that Congress never meant anything at all?
      • This case basically said that if Congress didn’t explicitly decide an issue by Statute, they implicitly meant that the Agency should decide it for them.
  • Steps in Interpreting Agency Statutes, based on the Chevron Doctrine:
      • Is the Congressional intent clear?
        • If yes, what is the right answer?
        • If Congress’ intent is ambiguous, then….
      • Is the Agency’s interpretation permissible?
        • If the Statute gives the Agency express delegation, is the interpretation non-arbitrary?
        • If the Statute only implicit delegation interpretation to the Agency, is the interpretation reasonable?